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Good financial advisers are good financial physicians. Good advisors posses the knowledge of finance, as good physicians possess knowledge of medicine, and good advisors add to it the skills of good physicians: asking, listening, empathizing, educating, and prescribing.

Larry Ellison, the head of the Oracle Corporation, is one of the richest men in the world and a winner of America’s Cup sailing competition. But the life of his financial advisor is difficult. Documents in a trial revealed that Ellison lives well. His annual “lifestyle” expenses amount to $20 million. A villa in Japan costs $25 million, a new yacht costs $194 million, and preparations for America’s Cup cost $80 million. The documents include emails to Ellison from his financial advisor. One email said “I know this e-mail may/will depress you. However, I believe it’s my job to address issues you’d prefer not to confront. You told me years ago that it’s OK to raise the “diversification issue” with you quarterly….Well, I’m doing so. View this as a call to arms.”

Fees come between financial advisors and their clients as they come between physicians and their patients. “I have a million dollars in my portfolio,” thinks a client. “I don’t mind paying a fee for the management of stocks. Stocks are complicated and I cannot manage them on my own. But the management of bonds is easy and cash needs no management at all. Why am I paying you a fee for these?” Financial advisers hope that clients would understand the value of their services and the fairness of their fees, yet fees are difficult to discuss because clients regularly misperceive the value of the services of financial advisors.

Imagine that you are seeing a physician because your stomach hurts. The physician asks many questions, examines your body, provides a diagnosis and concludes with education and advice. The examination, diagnosis, and education are free, says the physician. All you have to pay is the price of the pill you received. That would be $200, please.

Financial advisers act regularly as the physician in this story. Financial advisors frame themselves as investment managers, providers of “beat-the-market” pills, when they are, in truth, mostly investor managers, professionals who examine the financial resources and goals of investors, diagnose deficiencies, and educate investors about financial health.

Financial advisors are not capricious as they frame themselves as managers of investments when, in truth, they are mostly managers of investors. They merely respond to the perceptions of investors. They do so by framing fees for managing investors as fees for managing investments. “12b-1 fees” are one example. The fees were originally designed to help mutual fund companies attract new investors and eventually save investors money as funds grow and their costs decline. Yet the fees go to financial advisors who recommended the funds to their investors, and payment to advisors can extend into decades, long after money was placed into the funds. Mary Schapiro, the chairwoman of the Securities and Exchange Commission, is critical of 12b-1 fees. “Despite paying billions of dollars, many investors do not understand what 12b-1 fees are, and it’s likely that some don’t even know that these fees are being deducted from their funds or who they are ultimately compensating.” The S.E.C. is drafting new rules “designed to enhance clarity, fairness and competition when investors buy mutual funds.” Yet Robert Kurucza, partner in a law firm serving mutual fund companies, noted the downside of the proposed SEC. rule. 12b-1 fees compensate financial advisors for investment advice they continue to provide decades after they have placed clients into funds. Decreased compensation is likely to decrease advice.